Time to call the corporate bluff

THE Union budget provides an occasion for the UPA government to end its cosy ties with business houses and recognise the political economy of pain and deprivation. In his memoirs of his years as Finance Minister, Confessions of a Swadeshi Reformer, Yashwant Sinha writes, somewhat regretfully, that "economics in India has always been dominated by politics. My experience as Finance Minister proves this point beyond any doubt." After detailing many attempts from within and outside the sangh parivar at contesting and suborning his presumably good policies and equally good intentions, Mr. Sinha sums up a Finance Minister's conundrum: "Elections were important and winning them was also important. But we had to remember our responsibility was not only to the present but also to the future. Good economic policies could not, and should not, be sacrificed at the altar of political gain for the present."

It remains to be seen whether Finance Minister P. Chidambaram will be able to avoid the "populism of the present." After all, this will be the last serious budget before the political system drifts inexorably towards partisan battles of the next general election. Hence, the last chance to rectify not just a difficult economic situation but also to rescue it from political opportunism, and to salvage the idea and principles of economic reform from a soggy moral calculus.

In the process,

Mr. Chidambaram also gets another shot at restoring the United Progressive Alliance dispensation's reputation as competent manager of the national economy. On a personal note, he can be expected to want to use the budget to reverse the damage the economy suffered under Pranab Mukherjee these last three years. Three obligations

However, a budget is not just an exercise in balancing books; it is the finest instrument for showcasing a regime's political philosophy and notions of public morality behind its economic priorities. The power to impose taxes - and the expectation that citizens should joyfully submit to this demand - carries with it the ultimate democratic responsibility. When on February 28, he stands up to present his budget, Mr. Chidambaram will have to be mindful of at least three specific obligations that any Finance Minister needs to always keep in mind.

First, the budget cannot be an exercise in favouring and rewarding (or punishing) this or that business house. Easier said than done. Mr. Chidambaram is known to have friends in the corporate crowd. Perhaps it would be unfair to suggest that the Finance Minister would allow his friendships to cloud his judgment; nonetheless, it will not hurt if he were to be reminded of The Economist's sound advice to policymakers: "promote capitalism, not capitalists." This decade-old mantra remains valid and Finance Ministry mandarins will need to demonstrate that they are capable of making a distinction between the shabby interests of this or that capitalist and the healthy requirements of a complex and lawful economy.

There are good political reasons to heed this sage advice. The Finance Minister knows - as do his colleagues in the Congress party and the government - that much of the UPA's political difficulties have arisen on account of bad blood among the business houses. The genesis of the 2G controversy can be traced to greed and rivalry among corporate honchos. This unmoderated rancour within the corporate world soon sought - and found - passionate partisans and motivated advocates in 'civil society.'

A mock anti-corruption "move- ment" was unleashed to distract attention away from the excesses and illegalities of the corporate world. If Mr. Chidambaram still chooses to play favourites among the corporate houses, there will be a heavier political price to be paid by his party.

Business rivalries have already produced a different kind of disequilibrium. Corporate disputes have allowed the Supreme Court - rather some judges - to impose their own ideas and principles on the political executive. Judicial interventions and pronouncements are then worked upon to crank up anger and partisanship against selected political rivals.

Nonetheless, it must be presumed that the Congress has not totally shut down its political antennae. Its leadership knows that many of these captains of industry have an interventionist political agenda. It is no secret that a sizeable section of the Mumbai club is keen to rearrange the ruling arrangements in New Delhi around, say, a Sharad Pawar or a Narendra Modi after the next Lok Sabha elections. There is no earthly reason why the budget should seek to mollify these very greedy and politically ambitious business houses that have proved so intractable these last few years. Rather, the corporate bluff must be called.

Secondly, the budget should reveal a government that is not just wedded to the idea of wholesome public interest but is also cognisant of its obligations to be the ultimate promoter and protector of the social good. This basic democratic obligation has somehow been lost sight of in recent years. The budget provides yet another opportunity to the UPA government to satisfy the citizens that it is not in thrall of crony capitalism. It is not a mere platitude. This is an imperative, all the more because there are at least half a dozen senior Cabinet Ministers who are known for their proximity to this or that industrial house, and who at times find it difficult to resolve the conflict between their oath of office and their unhealthy ties with these super-affluent gentlemen. It is this soft corner for a tainted corporate crowd that has fed the perception of collusion and contributed to the alienation of the middle classes. The middle class quest for lawful governance cannot be satisfied without bringing the so-called economic entrepreneurs within the ambit of the law.

Thirdly, Mr. Chidambaram has an obligation to use the budget to signal that the democratic system has the will and the stamina to roll back the corporate offensive in running this country's national priorities and its collective affairs. No doubt, recovery of the Indian Growth Story is a national imperative; no doubt, the global economic slowdown has complicated this recovery; and, no doubt, "animal spirits" need to be unleashed. Yet, it should be unacceptable to liberal and sensitive voices that the national narrative has simply been hijacked by the presumed need to appease market sentiment, that too at the expense of democratic values. As a centrist party, the Congress in particular has to be always cognisant of the larger political economy of pain and deprivation. A democratic government cannot act as if it has no option but to behave like a hostage to the manipulators of the market sentiment.